RSG Republic Services 10-Q 2026-09-30 section summaries

Republic Services — Q3 and nine months ended September 30, 2026

Republic’s Q3 revenue growth accelerated to 8.2%, versus 5.2% for the first nine months. Operating income and attributable net income also increased. Environmental Solutions’ Q3 growth was notably stronger than its year-to-date trend, while Group 2 Adjusted EBITDA declined. The company continued acquisition investment and shareholder returns; debt, goodwill and other intangible assets increased.

Consolidated results

Q3 revenue by service

Environmental Solutions revenue increased 22% in Q3, compared with 4% for 9M ($1,392 million versus $1,344 million), reflecting a marked acceleration. Revenue in this business varies with waste volumes and types, market conditions, regulation, pricing and disposal alternatives; overall revenue is also affected by service volumes, price-escalation clauses, fuel recovery fees and commodity indices.

Segment performance

The CODM evaluates segment profitability using Adjusted EBITDA.

Group 3’s 9M Adjusted EBITDA was $304 million versus $298 million. Group 2’s Q3 Adjusted EBITDA declined despite higher revenue.

Q3 Adjusted EBITDA-to-pretax-income reconciliation ($ millions):

Cash flow and capital returns

Republic paid $1,116 million for acquisitions in 9M 2026. Acquisitions included a vertically integrated Kansas recycling and waste business, Robinson Waste Holdings in Utah, and a Texas hazardous-waste thermal-treatment business. Purchase-price allocations remain preliminary; 2026 acquisition additions included $617 million of goodwill and $198 million of other intangible assets, most expected to be tax-deductible.

Q3 repurchases were 0.9 million shares for $197 million, versus 2.3 million for $539 million in Q3 2025. For 9M, repurchases were 4.0 million shares for $848 million, versus 2.6 million for $594 million. The existing $3.0 billion authorization had $0.8 billion remaining; a new $5.0 billion authorization begins in 2027. The quarterly dividend declared was $0.670 per share, versus $0.625 a year earlier.

Balance sheet, debt and obligations

Other intangible assets comprised customer relationships of $628 million and other intangibles of $151 million; gross intangibles were $1,160 million with $381 million accumulated amortization. Implied tangible equity—total equity less goodwill and other intangibles—was negative $5,869 million, compared with negative $5,401 million. Shares outstanding, excluding treasury shares, decreased approximately from 308 million at year-end 2025 to 305 million at September 30, 2026.

June debt issuance included $700 million of 4.750% notes due 2031 and $500 million of 5.000% notes due 2036, used for general corporate purposes including repayment of credit-facility and commercial-paper borrowings. At period-end, borrowings included $899 million of commercial paper at a 4.094% weighted-average rate and $183 million under the $3.5 billion revolving facility. Facility availability was $2.1 billion after letters of credit; the commercial-paper cap had been raised to $2.0 billion. Tax-exempt bonds carry put and remarketing risk if refinancing or remarketing fails.

Landfill capping, closure and post-closure liabilities were $2,387 million, and environmental remediation liabilities were $423 million. Republic owned or operated 208 active landfills and had post-closure responsibility for 125 closed landfills. The EPA’s updated West Lake Superfund remedy estimate rose to $392 million undiscounted from $229 million; Republic cannot yet predict the final remedy or its share of costs. Management notes that changes in remediation scope, cost or timing could materially affect results and cash flows.

The effective tax rate was 17.6% in Q3 versus 14.7%, and 18.8% for 9M versus 21.4%. Renewable-energy investments provided tax benefits of $41 million in Q3 and $119 million in 9M. Nine-month interest expense rose to $459 million from $428 million, while equity-method investment losses increased to $158 million from $72 million. Cash taxes paid were $122 million versus $166 million. Restricted balances support landfill and insurance obligations; management reports no off-balance-sheet debt or similar obligations beyond short-term operating leases and financial assurances.

Republic Services — Q3 and nine months ended September 30, 2026

Consolidated results

Revenue increased 8.2% in Q3, compared with 5.2% for 9M—a 3.0-percentage-point difference. Growth reflected pricing and fuel recovery, acquisitions, and stronger environmental-solutions activity; declining collection volumes partly offset it. Operating margin rose to 20.2% from 19.9% in Q3 and to 20.2% from 20.1% for 9M. Q3 2025 results included $56 million of labor-disruption effects ($16 million in customer credits and $40 million in operating costs), which did not recur in 2026. Full-year 2026 revenue guidance is $17.425–$17.475 billion, assuming no significant change in overall economic conditions.

Q3 revenue by service line

Segment performance

Group 1 Q3 revenue rose 9.5% (8.3% for 9M), supported by yield and stronger landfill, small-container and large-container volumes; residential and construction-and-demolition landfill volumes declined. Group 2 revenue rose 3.7% (2.4% for 9M), reflecting yield and special-waste landfill volumes, partly offset by weaker collection and construction-and-demolition landfill activity after 2025 Hurricane Helene recovery work. Environmental Solutions growth reflected increased emergency-response activity. Higher labor, fuel, subcontract, transfer and disposal costs pressured segment profitability.

Pricing, volume and operating costs

Collection-volume pressure reflected municipal contract losses in residential service, and weaker construction-related and manufacturing activity in large-container service. Landfill construction-and-demolition volume also lacked the prior-year Hurricane Helene recovery work, partly offset by event-based special-waste volumes. Q3 average recycled-commodity prices (excluding glass and organics) were $142/ton versus $126/ton; 9M prices were $133/ton versus $143/ton. At current volume and mix, a $10/ton commodity-price change would affect annual revenue and operating income by about $13 million.

Q3 cost of operations included labor and benefits of $881 million versus $812 million, transportation/subcontracting of $363 million versus $302 million, and fuel of $180 million versus $120 million. National diesel prices averaged $5.56/gallon versus $3.76 in Q3 and $5.01 versus $3.65 for 9M. Wage increases, acquisitions, higher transport rates and fuel surcharges contributed to cost pressure. Maintenance and repair costs increased in dollars but fell as a share of revenue by 40 basis points in Q3 and 30 basis points for 9M. About 67% of collected solid-waste volume was disposed at company-owned or operated landfills in both periods.

SG&A was $447 million versus $422 million in Q3 and $1.316 billion versus $1.274 billion for 9M; its revenue share declined to 9.8% from 10.0% and to 10.0% from 10.2%, respectively. Interest expense rose primarily with higher debt balances and rates. The effective tax rate was 17.6% versus 14.7% in Q3 and 18.8% versus 21.4% for 9M; renewable-energy investments generated $41 million of Q3 and $119 million of 9M tax benefits.

Cash flow and capital allocation

Working-capital and other liability changes reduced operating cash flow by $112 million versus $35 million. Receivables increased $254 million versus $78 million; DSO rose to 42.4 days from 41.0 (32.8 from 30.2 days net of deferred revenue), largely due to revenue growth and billing/collection timing. The company repurchased 4.0 million shares for $856 million, including excise tax, versus 2.6 million shares for $599 million; dividends paid were $577 million versus $544 million. It expects to invest at least $1.2 billion in acquisitions in 2026, primarily in recycling, waste and complementary environmental-solutions businesses.

Liquidity, debt and capacity

At September 30, cash, cash equivalents, restricted cash and restricted cash equivalents totaled $288 million, versus $249 million at year-end 2025; the total excludes restricted marketable securities of $83 million and $86 million, respectively. The $3.5 billion unsecured revolver, maturing in July 2029, had $183 million borrowed, $315 million of letters of credit and $2.1 billion available; commercial-paper principal was $899 million. Commercial-paper capacity increased from $1.5 billion to $2.0 billion in August. The company issued $1.2 billion of senior notes in 9M 2026: $700 million of 4.750% notes due 2031 and $500 million of 5.000% notes due 2036. It had $2.3 billion of principal floating-rate debt; a 100-basis-point rate change would affect annualized interest expense and net cash interest payments by about $23 million.

Debt-to-EBITDA was approximately 2.6x against a 3.75x covenant limit (temporarily 4.25x after qualifying acquisitions); Republic reported compliance. It expects available cash, securities, operating cash flow and financing sources to cover needs for at least 12 months and the foreseeable future. The company operated 208 active landfills with 5.067 billion in-place cubic yards of available capacity, including 4.883 billion permitted and 184 million probable-expansion cubic yards. Twelve sites qualified for probable expansion, with an estimated 36-year average remaining life, versus 56 years across all landfills. Changes in landfill and remediation cost estimates or timing could materially affect results and cash flows.

Market risk

Fuel and related cost exposure

No fuel hedges were in place as of September 30, 2026. At current consumption, a $0.20-per-gallon change in diesel prices is estimated to change annual combined fuel expense and transportation surcharges by approximately $31 million. At current customer participation rates, the same price change is estimated to change annual fuel recovery fees by approximately $37 million. The company expects these fees to offset changes in fuel costs, but cannot charge them to all customers. Petrochemical-based products and vendor fuel surcharges are additional exposures that could increase operating and capital costs.

Recycling commodity exposure

No recycling commodity hedges were in place as of September 30, 2026, although the company has used cash-flow hedges in prior periods. At current volumes and materials mix, a $10 change in recycled commodity prices is estimated to change annual revenue and annual operating income by approximately $13 million each.

Interest-rate exposure

As of September 30, 2026, the company had $2.3 billion of principal floating-rate debt. A 100-basis-point increase or decrease in interest rates would raise or lower annualized interest expense and net cash interest payments by approximately $23 million. The company uses interest-rate swaps to manage borrowing costs and interest-rate locks ahead of anticipated debt issuances; it says it does not use financial instruments for trading and has no leveraged derivatives.

Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the quarter. No changes in internal control over financial reporting during the quarter materially affected, or were reasonably likely to materially affect, those controls.

Risk Factors

The company reported no material changes to the risk factors disclosed in its Form 10-K for the year ended December 31, 2025. This section describes no new or changed risks.

For the quarter ended September 30, 2026, no director or officer adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement for trading Republic Services securities.